FTSE 100 takes another fall to end at 5,040 points

It was another volatile day in the markets, as the FTSE 100 took an early tumble, taking it below 5,000 points, before a late afternoon rebound took it into positive territory. However, the respite was short-lived and a last-minute slump left the blue-chip index down 51.47 points, or 1.01%, at 5040.76 points.

Energy and engineering companies were among the biggest fallers, as investors fretted that the gloomy global economic outlook would reduce demand for products, thereby hitting the companies that make and power their manufacture.

Essar Energy fell by 8.7%, to close at 257.7p, Tullow oil declined by 4.8% to 957.7p and Weir Group, the engineer specialising in oil, gas and mining was down 4.4% at 1,750.6p. Wood Group, the oil services group fell by 3.6% after JPMorgan added to the general negative sentiment about energy and downgraded its rating on the shares from "overweight" to "neutral". Meanwhile, oil fell by as much as $1.93-a-barrel, before regaining ground in the afternoon to end the day in positive territory.

IMI, the engineering group, fell by 36.5p, or 4.7%, to end the day at 734.23p.

The banks also took another big hit amid mounting concerns that the US and European debt crises could prompt further large write-offs while the economic decline would be bad for business generally. Lloyds Banking Group, which tumbled by 9% on Thursday, fell another 4.7% today to close at 28.3p. Royal Bank of Scotland followed Thursday's 11% decline with another 5.4% drop to 20.77p.

Uncertainties about how easy credit is likely to be to come by in the coming months, combined with general economic uncertainty to drag down companies in the building industry.

Wolseley, the building materials supplier, fell by 4.7% to close at 1.413.2p, while property developer Land Securities declined by 3.9% to 741.67p.

Among the risers, there was no contest for the kingpin of the day. Software maker Autonomy soared by 72.0% to end the day at 2,473p after news of a £25.50-a-share bid from Hewlett-Packard attracted investors from far and wide.

The bid also prompted hopes that Autonomy's rivals in the UK and overseas may also be targeted, sending shares in software companies higher.

Arm Holdings, the Cambridge-based semiconductor and software group, increased by 11.3p, or 2.3%, to close at 492.89p. Among the FSTE 250, Misys, the financial services-focussed IT group, was among the biggest risers, ending the day 6.1% higher at 249p.

Randgold Resources, the gold mining company, benefited from the precious metal's seemingly inexorable rise, as investors increasingly rely on it as a safe haven in an increasingly risky investment world.

Shares in the London-listed, Africa-focussed gold miner rose by 3.0% to close at at 6,613.3p on a day when the precious metal hit a fresh record, of $1,867.95-an-ounce.

Elsewhere in the commodities market, many raw materials continued to decline in value amid fears that they won't be needed as much in a weakening global economy. Tin fell by 2.9%, aluminium by 2.6%, lead by 1.0% and nickel by 0.3%.

Anglo American, the mining giant, fell by 2.6% amid rumours that it was exploring a bid for Macarthur Coal that would challenge an existing offer by Peabody Energy.

After a day in which the FTSE 100 clocked up its biggest drop – of 4.5% - since November 2008, yesterday's relatively small decline at the close restored some much needed calm to the markets – even if the stocks see-sawed a lot on the way.